Gold Price Prediction – Prices Rally as Yields Drop

Gold prices rallied sharply the day after the Fed decision to taper their bond purchase program. Interest rates dropped sharply, and the dollar rallied, which is counter-intuitive. The Fed said that they will be patient and will keep a sharp eye on the job market. They also believe that inflation will remain elevated for an extended period but will be transitory. ADP released a stronger than expected private payroll report on Thursday ahead of Friday’s Non-Farm Payroll report. Expectations are for payrolls to rise by 450,000 jobs.

Technical analysis

Gold prices rose sharply after droppoing on Wednesday and bounced at support levels seen near the November lows at 1,758. Prices recaptured resistance, which is now support, seen near the 50-day moving average at 1779. Resistance is seen near a downward sloping trend line that comes in near 1,805. Short-term momentum is positive as the fast stochastic generates a crossover buy signal. Medium-term momentum has also turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

ADP Private Payrolls Rise

ADP reported on Thursday that U.S. companies added 571,000 for the month, beating expectations of 395,000 and above September’s 523,000. It was the best month for jobs since June. Leisure and hospitality, a category that includes bars, restaurants, hotels and the like, saw a gain of 185,000 for a sector that remains well below its pre-pandemic employment level.